OTTAWA – The Canadian television broadcasting sector saw total operating revenues rise 0.9% to $7.5 billion in 2016, while profits before interest and taxes grew 15.9% from $732.8 million in 2015 to $849.0 million in 2016, according to newly released data from Statistics Canada.
These gains were the result of a $68.3 million jump in subscription revenues, from $2.920 billion in 2015 to $2.988 billion in 2016, and a 5.8% increase in public and private subsidies from $892.9 million to $944.8 million. These increases more than offset the 0.9% decrease in air time sales and a 7.5% decline in other revenue.
The private conventional television segment's share of operating revenues in the television broadcasting sector continued to shrink in 2016. This segment generated $1.8 billion in operating revenues, representing 23.9% of the total operating revenues for the sector, down from 25.5% in 2015. Specialty television (48.2%) continued to increase its market share with operating revenues of $3.6 billion, while public and non-commercial television (18.1%) and pay television (9.9%) accounted for the remaining operating revenues of the television broadcasting sector.
Operating revenues for the public and non-commercial television segment rose 5.9% to $1.4 billion in 2016. Advertising sales for this segment increased 20.3% to $279.4 million, compared with $232.3 million in 2015.
Operating expenses for the public and non-commercial television segment increased 2.2%, from $1.29 billion in 2015 to $1.32 billion in 2016, as a result of programming expenses and sales and promotion expenses. In 2016, this segment posted $824.5 million in programming expenses, compared with $770.0 million in the prior year. Sales and promotion rose from $121.0 million in 2015 to $135.5 million in 2016. This segment saw a surplus of $36.2 million in 2016 with a gross profit margin of 2.7%.
With a 2.7% increase in its operating revenues, the specialty television segment saw a 4.5% increase in its profits before interest and taxes in 2016, bringing the profit margin to 25.7%. Operating expenses were up 2.2% to $2.7 billion, mainly due to a $75.5 million rise in programming expenses.
The pay television segment generated a $292.0 million profit before interest and taxes in 2016, bringing the gross profit margin to 0.04%.
Revenue from air time sales continue to fall
Air time sales, the main component of revenue, fell 0.9% to $3.2 billion in 2016, continuing a downward trend that began in 2012. In 2016, the private television segment saw air time sales decrease 5.4%, while the pay television segment experienced a 41.1% drop. Air time sales for the public and non-commercial television segment increased 20.3%, while sales in the specialty television segment rose 1.7%.
The decline in air time sales in the television broadcasting sector in 2016 was slightly offset by an increase in subscription revenues, which rose 2.3% from 2015 to $3.0 billion in 2016.
The private conventional television sector accounted for 52% of the market share of air time sales in 2016. By comparison, the market share of advertising sales was 39.3% for the specialty television segment and 8.8% for the public and non-commercial television segment.
Private conventional television posts losses in all provinces
Total operating revenues for the Canadian private conventional television segment decreased 5.4% to $1.8 billion in 2016. Operating expenses fell 6.5% to $1.9 billion, leading to losses of $114.0 million and a profit margin before interest and taxes of negative 6.4%.
In the Atlantic provinces, the losses amounted to $16.3 million in 2016, compared with $14.8 million in 2015. A 4.1% decrease in operating revenues, combined with a 1.5% decline in operating expenses, explains these losses.
In Quebec, losses before interest and taxes were $9.8 million in 2016, compared with losses of $11.7 million the previous year. This slight improvement in 2016 is explained by a 2.6% decrease in operating revenues, to $363.7 million, and a 3.0% decline in operating expenses, to $373.6 million.
In Ontario, operating revenues fell 6.8% to $809.7 million in 2016, compared with $868.8 million in 2015. Operating expenses declined 8.2% to $851.9 million, resulting in losses of $42.1 million.
Private conventional television stations in Western Canada recorded losses before interest and taxes of $45.8 million in 2016, compared with $57.4 million in 2015. This improvement is due to operating expenses that fell 6.6% to $591.2 million and operating revenues that saw a 5.3% decline to $545.4 million.
